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HP reports fall in fourth-quarter revenue ahead of planned split in 2015

HP reports fall in fourth-quarter revenue ahead of planned split in 2015

HP's sales fell 2.5 per cent in the fourth quarter to US $28.41 billion, from US $29.13 billion a year earlier, Hewlett-Packard said on Tuesday.

(Photo: Reuters) (Photo: Reuters)

Hewlett-Packard (HP) reported a fall in its fourth quarter revenue in almost every business segment over the year, highlighting weaknesses ahead of the software company's planned 2015 separation of its enterprise services from its traditional computer and printing units.

HP's sales fell 2.5 per cent in the fourth quarter to US $28.41 billion, from US $29.13 billion a year earlier, HP said on Tuesday. Analysts had expected US $28.76 billion.

The company's profit declined 2.7 per cent to US $2.01 billion (or US $1.06 cents a share), compared with US $1.01 cents a share a year ago, in line with analysts' expectations.

On a more traditional accounting basis, HP's profit declined 5.7 per cent to US $1.33 billion, or 70 cents a share, compared with 73 cents a share a year ago.

"I've always said that turnarounds aren't linear," Chief Executive Meg Whitman told analysts on a conference call while highlighting HP's performance compared with three years ago, when she became CEO. "We're right where we thought we'd be."

The enterprise group and enterprise services, areas that Whitman had previously flagged as growth drivers, showed fall in revenue of 4 per cent and 7 per cent respectively.

On the call, the CEO said she expected a slower decline in enterprise revenue next year. Enterprise services would be the biggest "swing factor" in the company's 2015 growth projections, she said.

For 2015, the company said it expects to earn US $3.83 to US $4.03 per share, up from US $3.74 for 2014.

The company's personal computer division, its largest and most mature, grew by 4 per cent after a 12 per cent jump in the previous quarter. Much of the growth in PCs was driven by a Microsoft Corp decision to quit supporting older software, a process that Whitman said was largely complete.

The high-margin printer business shrank by 5 per cent.

In October, the company said it would split into two listed companies in 2015, separating its computer and printer businesses from its faster-growing corporate hardware and services operations, and eliminate another 5,000 jobs as part of its turnaround plan.

"This separation was totally the right thing to do for this company," Whitman said Tuesday. "It is remarkable how it focuses the mind on overhead."

(Additional reporting by Abhirup Roy in Bangalore and Christina Farr in San Francisco) - Reuters